COMMENTARY

Frank Convery, Economics and Environment over the past decade – a global perspective

September 1, 2019

Irish Environment is now ten years old. Congratulations to Bob for keeping us all informed and up to the mark as we struggle to protect our environmental commons. The biggest progress in the past decade globally has been the achievement of dramatic reductions in the costs, and increase in the performance, of solar panels and wind turbines for electricity production. It is not true to say that in Ireland wind can now generally compete commercially with fossil fuel sources – intermittency of supply still adds costs not captured in the marginal unit cost estimates – but if the storage challenge can be successfully addressed so that back up power is delivered at low cost, we will be well on our way to a pathway towards zero emissions energy supply. This dramatic improvement in the costs of renewables supply has been a product of: great courage, leadership and talent in Denmark, which pioneered the use of the technology at scale; it had the huge advantage of access to low cost back up from hydro supplies in Norway and Sweden, but nevertheless it incurred a lot of the early first mover disadvantages from which everyone learned; a lot of learning by doing in Germany, Spain and Texas, who provided generous subsidies that made supply and consumption of renewable electricity an attractive option at scale and they all conducted valuable R&D; China’s decision to subsidize consumption provided a huge market and manufacturers of solar panels captured very large economies of scale and scope in production.

That is the really good news of the decade, and it is what has allowed Ireland to be credible in decarbonizing the electricity supply (30% of total supply in 2018)

But there is also bad news. In order of priority, the four most important actors on the word stage as regards conservation of the environment are China, the US, Brazil and European Union

Keynes observed that “Each age needs to distinguish for itself between what the state ought to do, and what ought to be left to the individual, or, in Bentham’s term, between the Agenda and the Non-Agenda of government.”

The biggest geopolitical change we observe in the 10 years since this splendid magazine was founded is the decision by the middle two (US and Brazil) to, at national level, move conservation of the environmental commons off their ‘Agenda’. President Trump and his allies in the US congress, and Brazil’s President Bolsonaro bring a passionate intensity to the fulfilment of their ambitions to remove conservation from their agendas, and allowing the market untrammelled to reign.

The situation at present is more positive as regards the other two. China is the most important global actor, because of its huge economic and demographic heft. Its influence is growing as the Belt and Road initiative links China with over 70 countries which together already account for 65% of the world’s population and 33% of GDP. Its global ecological footprint is vast, with greenhouse gas emissions accounting for 28% of the global total. The EU continues to hold its shape and provide a coherent platform of legally binding objectives and clear pathways towards their achievement. In the recent meeting of Presidents Xi and Macron, they concluded that “China and France should shoulder the roles of great powers in face of the mutual challenge of protectionism, unilateralism and climate change by being independent and working together.”

Ireland’s most important contribution is to be a proactive, practical, courageous and useful partner in advancing the EU ambitions. If the EU and China fail, we all fail. And we need to support the many in the US and Brazil who are working to get their countries back on track.